# EUR-Lex - 52013PC0493 - EN

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# 52013PC0493

**Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the participation of the Union in a Research and Development Programme jointly undertaken by several Member States aimed at supporting research performing small and medium-sized enterprises /* COM/2013/0493 final - 2013/0232 (COD) */**

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EXPLANATORY MEMORANDUM

1.           CONTEXT
OF THE PROPOSAL

1.1.        Objectives of the proposal

This proposal concerns the participation of
the European Union, on the basis of Article 185 of the Treaty on the
Functioning of the European Union (TFEU), in the Eurostars-2 Joint Programme (Eurostars-2)
undertaken by several Member States as a follow-up to the Eurostars Joint
Programme.

The overall objectives of the Eurostars-2 are:

Ÿ             to promote market-oriented transnational research
activities in any fields of research-performing small and medium-sized
enterprises (SMEs)[1],[2],
especially those without previous experience in transnational research, leading
to the placing of new or improved products, processes and services on the
market;

Ÿ             to contribute to the completion of the European
Research Area (ERA) and to increase the accessibility, efficiency and efficacy
of public funding for research-performing SMEs in Europe by aligning, harmonising
and synchronising the national funding mechanisms.

The competitiveness of research-performing
SMEs will be enhanced and will therefore actively contribute to European
economic growth and job creation to achieve the Europe 2020 objectives.

1.2.        Grounds for the proposal

SMEs make up the backbone of the European
economy and have the potential to contribute significantly to creating more
growth and jobs in the European Union. Across the EU, there are around
20.7 million SMEs representing more than 98 % of all businesses in the EU,
accounting for approximately 58 % of the EU’s GVA[3],[4] and employing more than
87 million people (67 % of total employment, and in some key industries as
much as 80 % of all jobs).

Amongst those SMEs, innovative research-performing
SMEs form a very dynamic sub-group which can greatly contribute to growth and
jobs, even more so if they are engaged in transnational R&D collaboration. However,
a number of market failures prevent SMEs from easily accessing the necessary
private funding for their R&D; existing national R&D programmes very
seldom accommodate transnational collaborations and are not sufficiently
synchronised and interoperable. In addition, while a number of complementary EU
initiatives address innovative SMEs (e.g. the financial instruments such as the
Risk Sharing Instrument or the newly conceived SME instrument), a programme
specifically dedicated to transnational R&D performed by research intensive
SMEs does not exist at EU level.

In 2008, 32[5]
European countries that were members of the Eureka network[6] decided to adopt a coherent
approach at European level in the field of research-performing SMEs by setting
up the Eurostars Joint Programme. The objective of Eurostars is to support
research-performing SMEs by co-financing their market-oriented transnational
research in a bottom-up manner and by providing them with a legal and
organisational framework.

Under the Decision[7] of 9 July 2008 of the European
Parliament and the Council, the European Union participates financially in
Eurostars by way of Article 185 TFEU (ex-Article 169 EC) with a contribution of
up to one third of the effective contributions of the participating Member
States and the other participating countries, within a ceiling of € 100 million,
for the period 2008-2013. The Eurostars Programme is implemented through a
dedicated implementation structure, the Eureka Secretariat (‘the ESE’), which
is responsible for the execution of the programme, in particular organisation
of the calls for proposals, verification of the eligibility criteria,
peer-review evaluation and selection of projects, monitoring of projects and
allocation of the Union contribution.

An interim evaluation of Eurostars[8] was conducted in 2010 by a
Group of Independent Experts[9],
to which the Commission replied with an Interim Evaluation Report[10], adopted in April 2011. The Competitiveness
Council, in its conclusions of 31 May 2011[11]
on the above-mentioned documents, welcomed the view of the Group that Eurostars
is well aligned with the objectives of Europe 2020, complements well the
opportunities offered to SMEs in FP7 for international cooperation and has
proven attractive to the target group by successfully reaching European research-performing
SMEs. It also welcomed the Group’s recommendation that Eurostars be continued beyond
2013 and committed to consider its continuation in the overall context of the
future Common Strategic Framework for Research and Innovation Funding.

The Council also highlighted a number of
recommendations for improving the programme in the future, including the need
for participating countries and the EU to provide sufficient funds to finance a
maximum of top-ranking projects meeting the Eurostars threshold criteria; the
need to further streamline and harmonise the implementation processes and
funding rules at national level to improve the effectiveness and efficiency of
Eurostars; and the need to continuously improve the quality of evaluations and to
keep a short time to contract as a priority.

On 22 June 2012, the Eureka Ministerial
Conference in Budapest endorsed a document (‘the Budapest document’) stating the
interest of the Eureka countries in supporting the follow-up to the Eurostars Programme.
The Budapest document sets out a common vision for a Eurostars-2 and the basis
for addressing the above-mentioned recommendations of the interim evaluation. In
January 2013, the informal financial commitment indicated by the majority of
the Eurostars countries for the period 2014-2020 amounted to almost three times
the countries’ commitments for Eurostars. The Budapest document invites the EU
to participate in Eurostars-2.

The Commission proposal for Horizon 2020[12] includes a dedicated activity
for research-intensive SMEs in ‘Innovation in SMEs’, which will support the
next stage in the Eurostars scheme implemented in partnership with Member
States and reoriented along the lines stated in its interim evaluation. This is
the only programme under Horizon 2020 specifically dedicated to research-performing
SMEs, open in any field of research and development, and having an additional
impact on furthering integration of national research programmes, therefore
contributing to the completion of the ERA. With its bottom-up approach and
business-driven agenda, Eurostars-2 is well placed under the ‘Industrial
Leadership’ part and will strongly contribute to achieving its objectives by
supporting projects of direct relevance to a number of leading and enabling
industrial technologies and help innovative research intensive SMEs to grow
into world-leading companies.

2.           RESULTS OF CONSULTATIONS WITH INTERESTED
PARTIES AND IMPACT ASSESSMENTS

2.1.        Consultation on the future
on the Eurostars Joint Programme

An extensive number of consultations have
been performed during the last three years on Eurostars and its future
development. They have covered all internal and external stakeholders. Comments
have been received among other things on the identification of the main
problems and barriers, on issues linked to subsidiarity and on possible future
options and their impacts.

An open public consultation on the SME
support measures and on the use of Article 185 TFEU took place as part of the
public consultation on the ‘Green Paper on a Common Strategic Framework for EU
Research and Innovation Funding’, European Commission, February–May 2011. Eurostars
was addressed or mentioned in 70 of the 849 position papers responding to the
Green Paper. The views were positive for more than 80 % of the responding organisations.
The few critical comments (10 %) mainly had to do with synchronisation
issues. Other remarks focused on the fact that Member States’ commitments were not
always honoured, on the harmonisation of funding rules, on the budget level and
the time to contract.

The Green Paper open consultation was
followed up by two open Workshops on ‘Innovation in Small and Medium
Enterprises’ in Brussels[13]
involving 160 participants consisting of experts in both R&I and SME
matters coming from European and national SME and industry associations and representatives
of Member States, governmental bodies and SME National Contact Points. The
workshop discussions led to two main conclusions on the scope of a future
Eurostars-2: firstly, Eurostars-2 should continue with the same target group (research-performing
SMEs); secondly, there was no support among the workshop participants for the
idea of enlarging the scope of Eurostars also to non-research-performing SMEs
since the number and size of national programmes supporting other kind of SMEs
(such as research for the benefit of SMEs) was not sufficient to form a
critical mass and to set up a joint programme under Article 185 TFEU.

Potential and actual final beneficiaries of
projects funded under Eurostars (SMEs and
research institutes) and other stakeholders were also
consulted in the context of the interim evaluation by the Group of Independent
Experts in 2010[14].
The group recommended continuing the programme subject to the improvements
along the lines indicated in the report.

The Commission discussed continuing to
provide EU support for Eurostars-2 in an Impact Assessment Steering Group (IASG)
gathering different Commission departments in 2012. The IASG contributed to the
planning and roadmap for the preparation of the Impact Assessment Report
accompanying this proposal, with special reference to the problem statement and
the relevance of the Eurostars Joint Programme to other EU policies.

2.2.        The policy options

The Impact Assessment Report included the
following options:

Option 1 — The business as usual (BAU)
option (baseline)

This option corresponds to the continuation
of the existing Eurostars Joint Programme during the next programming period
(2014-2020) with its current format, implementation arrangements and overall
budget. The EU participation and financial contribution would be the same as
for Eurostars 1 (the EU financial contribution is up to € 100 million under
FP7). This option is set as the baseline.

Option 2 —
The zero option (no EU involvement in Eurostars-2)

Under this option the EU participation and
financial contribution to Eurostars would be stopped after the end of its
current funding phase (by the end of 2013). Member States would be left to
decide whether to continue Eurostars and to what extent to pursue the
scientific, managerial and financial integration.

Option 3 —
The reinforced partnership option

The reinforced partnership option means
that the existing Eurostars Joint Programme would be continued in the next
programming period as an Article 185 TFEU initiative in an improved format
based on full implementation of the recommendations made in the Interim Evaluation
Report and with an enhanced degree of integration and on an extended scale.

Strongly encouraged by the Commission departments,
Eureka member countries have agreed on specific measures to be implemented in
Eurostars-2 which will lead to a short time to contract, more standardisation
of rules and processes, lean administration and higher synchronisation and
integration of funding. In order to enhance the programme and to support a greater
number of research-intensive SMEs with growth potential, Member States committed
to substantially increasing the financial volume of the programme. This
responds to the increasing demand from SMEs since the start of the programme
and reflects the absorption capacity of the Eurostars target group. Consequently
and in order to incentivise and support further the above-mentioned
improvements, the EU financial contribution would be raised accordingly.

2.3.        Results of the ex-ante
impact assessment

The ex-ante impact assessment concluded
that Option 3 is the preferred option in view of its effectiveness in achieving
the objectives, its efficiency and its coherence across all criteria. This is
fully supported by the stakeholders, since 99 % of the respondents to a
survey addressed to all HLRs/NPCs in November 2012 (28 Eureka HLRs and/or NPCs
from 22 Eureka member countries replied) considered the option of a ‘New
reinforced partnership’ as very suitable and capable of bringing more impact in
‘enhancing the competitiveness of R&D-performing SMEs’.

In February 2012, the
Impact Assessment Board reviewed and approved the Impact Assessment Report. In
its Opinion it requested improvements to the report, and these have been taken
into account. In particular, the report now explains more clearly the policy
context, the relations with other EU initiatives, the remaining problems and
the specific measures to address them and links them more closely to the
options. The objectives were revised to provide a solid basis for measuring the
progress achieved by Eurostars. Finally, the comparison of options in terms of
effectiveness, efficiency and coherence was improved and the views of
stakeholders better spelled out.

3.           LEGAL ELEMENTS OF THE PROPOSAL

3.1.        Legal basis

The proposal for Eurostars-2
is based on Article 185 of the TFEU, which states that
the Union may make provision for the participation of the European Union in
research and development programmes undertaken by several Member States,
including participation in the structures created for the execution of those
programmes.

The Horizon 2020 Communication[15] indicates that: ‘partnership
approaches on the basis of Articles 185 and 187 of the Treaty will also be
continued’.

Article 20(2)(b) of the proposal for a
Regulation establishing Horizon 2020[16]
lists a number of criteria for how public-public partnerships are to be
identified. Eurostars complies with those criteria: the ‘Budapest document’ on
Eurostars-2 endorsed by all Eureka countries provides (a) a clear definition of
the objectives to be pursued in conformity with the objectives of Horizon 2020
and broader Union policy objectives indicated in section 1.1, (b) the financial
commitments of the participating countries, (c) the added value of action at
Union level as mentioned in section 3.2 and (d) the critical mass, with regard
to the size and the number of national programmes involved.

3.2.        Subsidiarity and
proportionality principle

The subsidiarity principle applies as the
proposal does not fall under the exclusive competence of the European Union.
Subsidiarity is safeguarded by basing the proposal on Article 185 TFEU, which
explicitly provides for the participation of the Union in research programmes
undertaken by several Member States, whereby all operational aspects are
implemented where possible at national level, while ensuring a coherent
approach at the European level of the joint programme.

The objectives of the proposal cannot be
sufficiently achieved by the Member States alone: the national research
programmes supporting research-performing SMEs lack interoperability and
compatibility and only very few national programme cycles are synchronised and
use a joint international peer review.

Eurostars-2 respects the proportionality
principle as the Member States themselves will be responsible for
implementation and all operational aspects. The role of the EU is limited to
providing incentives for improved coordination of participating programmes and
harmonisation of rules and regulations, to the benefit of SMEs interested in
transnational R&D activities, and also ensuring synergy with relevant
complementary activities in Horizon 2020.

The added value of the Union action is
significant as the EU involvement will enable the creation of a new legal
framework where EU and national funding can be pooled under a common strategy
to stimulate transnational collaborative R&D projects initiated and led by research-performing
SMEs. The pooling of resources from national programmes and from the EU enables
a critical mass to be achieved that can better address the challenges faced by research-performing
SMEs. This would otherwise not be feasible using the existing structures in Horizon
2020 and within national programmes. The Union’s contribution shall be equal to
one third of thecontributions of the participating states.

In particular, the proposed organisational
structure keeps the administrative burden to a minimum, by having the main
administrative work carried out through national agencies under the supervision
and overall responsibility of the common legal structure identified for this
purpose.

3.3.        Choice of instrument

The proposed instrument is a Decision by the
European Parliament and Council based on Article 185 of the TFEU.

3.4.        Derogations from the Horizon
2020 Rules for Participation

The proposal allows derogations from a
number of Articles, namely Article 14(5) on the verification of the financial
capacity of applicant. Article 16(1) on grant agreements, Article 19 (1), (5)
to (7) on the implementation of the action, Articles 22 to 28 on funding rules of
the action. Those derogations result from the breakdown of responsibilities
between the ESE and the national funding agencies: the ESE is in charge of
receiving, distributing and monitoring the European Union contribution
channelled to the beneficiaries through the national funding agencies.

The main reason for it is that SMEs, the specific
target group of Eurostars-2, in certain cases can feel more at ease with the well-known
rules of the participating national funding programmes than EU rules. The administrative
and legal barriers to the participation of these SMEs in transnational research
and innovation activities is therefore lowered by the application of national
funding rules and the provision of the Union’s financial contribution and the
corresponding national public support through one grant agreement.

The proposal provides appropriate
safeguards to guarantee respect for the principles of equal treatment and
transparency by the dedicated implementation structure when providing financial
support to third parties, and in order to protect the financial interests of
the Union. It also provides for the inclusion of detailed provisions to this end
in an agreement to be concluded between the Union and the dedicated
implementation structure, including strong pressure for the rapid progressive
harmonisation and alignment of national programme rules.

4.           BUDGETARY IMPLICATION

The Legislative Financial Statement
presented with this decision sets out the indicative budgetary implications.
The maximum Union’s financial contribution, including EFTA appropriations, to
Eurostars-2 shall be EUR 287 million in current prices for the duration of the
Horizon 2020 Framework Programme. The contributions will be made from the
following objective[17]
under Part II ‘Industrial Leadership’

Ÿ        ‘Innovation in SMEs’

The provisions of the Decision and of the
delegation agreement to be concluded between the Commission and the dedicated
implementation structure must ensure that the EU financial interests are
protected.

Legislative Financial Statement presented
with this Decision sets out the indicative budgetary implications.

5.           OPTIONAL ELEMENTS

5.1.        Simplification

The proposal
provides for the simplification of administrative procedures for public
authorities (EU or national) and for private parties.

In
particular, recipients of the research funding from the new joint programme
will benefit from a single contracting and payment scheme using familiar
national rules without any need for separate reporting with regard to the Union’s
contribution.

The EU will
deal directly with the dedicated implementation structure of Eurostars-2, which
will be in charge of allocating, monitoring and reporting on the use of the Union’s
contribution.

5.2.        Review/revision/sunset
clause

The proposal
includes a review clause for a mid-term review after three years. The overall
duration will be limited to seven years.

5.3.        European Economic Area

The proposed
act concerns an EEA matter and should therefore extend to the European Economic
Area.

2013/0232 (COD)

Proposal for a

DECISION OF THE EUROPEAN PARLIAMENT
AND OF THE COUNCIL

on the participation of the Union in a
Research and Development Programme jointly undertaken by several Member States
aimed at supporting research performing small and medium-sized enterprises

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE
COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the
Functioning of the European Union, and in particular Articles 185 and the
second paragraph of Article 188 thereof,

Having regard to the proposal from the
European Commission,

After transmission of the draft legislative
act to the national Parliaments,

Having regard to the opinion of the
European Economic and Social Committee[18],

Acting in accordance with the ordinary
legislative procedure,

Whereas:

(1)       In its Communication
Europe 2020 A Strategy for smart, sustainable and inclusive growth[19] the Commission underscores the
need to develop favourable conditions for investment in knowledge and
innovation so as to achieve smart, sustainable and inclusive growth in the
Union. Both European Parliament and Council have endorsed this strategy.

(2)       Horizon 2020 – The
Framework Programme for Research and Innovation (2014-2020) established by
Regulation (EU) No .../2013 of the European Parliament and of the Council of ...
2013[20]
(hereinafter "Horizon 2020 Framework Programme") aims at achieving a
greater impact on research and innovation by contributing to the strengthening
of public-public partnerships, including through Union participation in
programmes undertaken by several Member States in accordance with Article 185
of the Treaty.

(3)       By Decision No 743/2008/EC
of the European Parliament and of the Council of 9 July 2008 on the Community’s
participation in a research and development programme undertaken by several
Member States aimed at supporting research and development performing small and
medium-sized enterprises[21],
the Community decided to make a financial contribution to Eurostars, a Joint
Programme undertaken by all Member States and five participating countries in
the framework of Eureka, an intergovernmental initiative established in 1985
with the objective of promoting cooperation in industrial research.

(4)       In April 2012, the
Commission communicated to the European Parliament and the Council a report on
the Interim evaluation of Eurostars Joint Programme[22] carried out by a Group of
Independent Experts two years after the beginning of the programme. The overall
opinion of the experts was that the Eurostars programme meets its objectives,
adds value to European research-performing small and medium-sized enterprises
(hereinafter ‘SMEs’) and should be continued after 2013. A number of
recommendations for improvement were made, mainly addressing the need of
further integration of national programmes and improvements in the operational
performance in order to reach shorter time to contract and more transparency in
the procedures.

(5)       The definition of SME
provided for in Commission Recommendation 2003/361/EC of 6 May 2003
concerning the definition of micro, small and medium-sized enterprises[23] should
apply.

(6)       According to Council
Decision 2013/.../EU of ... 2013 establishing the Specific Programme implementing
Horizon 2020 - The Framework Programme for Research and Innovation (2014-2020)[24], support may be provided to an
action building on the Eurostars Joint programme and reorienting it along the
lines stated in its interim evaluation.

(7)       The Eurostars-2 Programme
(hereinafter “Eurostars-2”), aligned with the Europe 2020 strategy, the related
Flagship initiative ‘Innovation Union’[25]
and ‘A Reinforced European Research Area Partnership for Excellence and Growth’[26] will aim at supporting
research performing SMEs by co-financing their market oriented research
projects in any field. As such, and in combination with the activities under
the ‘Leading and Enabling Technology’ objective set out in the Horizon 2020
Framework Programme, it will contribute to the goals of the Industrial
Leadership part of that programme to speed-up development of the technologies
and innovations that will underpin tomorrow’s businesses and help innovative
European SMEs to grow into world-leading companies. As part of the improvements
from the previous Eurostars programme, Eurostars-2 should head towards shorter
time to grant, stronger integration and lean, transparent and more efficient
administration to the ultimate benefit of research performing SMEs.

(8)       The Eureka Ministerial
Conference on 22 June 2012 in Budapest endorsed a strategic vision for
Eurostars-2 (hereafter “Budapest Document”). The ministers committed to support
the continuation of the Eurostars Joint programme after its termination in 2013
for the period covered by the Horizon 2020 Framework Programme. This will
consist of a reinforced partnership addressing the recommendations of the
interim evaluation of the Eurostars Joint Programme. The Budapest Document sets
out two main objectives for Eurostars-2. Firstly, a structural-oriented
objective to deepen the synchronisation and alignment of the national research
programmes in the field of funding, which is a central element towards the
realisation of the European Research Area by the member countries. Secondly a
content-related objective to support research performing SMEs engaging in
transnational research and innovation projects. The Budapest Document invites
the Union to participate in the programme.

(9)       The participating states
intend to contribute to the implementation of Eurostars-2 during the period
covered by Eurostars-2 (2014-2024).

(10)     A ceiling should be
established for the Union’s financial contribution to Eurostars-2 for the
duration of the Horizon 2020 Framework Programme. Within that ceiling, the
Union’s contribution should be equal to one third of the contribution of the
participating states in order to ensure a critical mass necessary to satisfy
the demand from projects deserving financial support, to achieve a high
leverage effect and ensure stronger integration of national research programmes
of the participating states.

(11)     In line with the objectives
of the Horizon2020 Framework Programme, any Member State and any country
associated to the Horizon 2020 Framework Programme should be entitled to
participate in Eurostars-2.

(12)     The Union’s financial
contribution should be subject to formal commitments from the participating
states to contribute to the implementation of Eurostars-2 and to the fulfilment
of those commitments. Financial support under Eurostars-2 should mainly take
the form of grants to projects selected following calls for proposals launched
under the Eurostars-2. In order to meet the objectives of Eurostars-2, the
participating states shall ensure sufficient financial contribution to fund a
reasonable number of proposals selected through each call.

(13)     The joint implementation of
Eurostars-2 requires an implementation structure. The participating states have
agreed on designating the Eureka Secretariat (hereinafter “ESE”) as the
implementation structure for Eurostars-2. ESE is a non-profit international
association under Belgian law and, since 2008, is responsible for the implementation
of Eurostars. ESE’s role goes beyond the implementation of Eurostars, being at
the same time the secretariat of the Eureka initiative, with its own governance
linked to the managing of Eureka projects outside of Eurostars. The Union,
represented by the Commission, is a founding member of the Eureka initiative
and full member of the Eureka Secretariat association.

(14)     In order to achieve the
objectives of Eurostars-2, ESE should be in charge of the organisation of the calls
for proposals, the verification of the eligibility criteria, the peer-review
evaluation and the selection and the monitoring of projects as well as the
allocation of the Union contribution. The evaluation of proposals should be
performed centrally by independent external experts under the responsibility of
ESE following calls for proposals. The projects’ ranking list should be binding
for the participating states as regards the allocation of funding from the
Union's financial contribution and from contribution from participating states.

(15)     Overall the programme
should demonstrate a clear progress towards further alignment and
synchronisation of the national research and innovation programmes as a truly
Joint Programme featuring stronger scientific, management and financial
synchronisation. Stronger scientific integration should be achieved through the
common definition and implementation of activities and should ensure the
excellence and the high impact of the projects selected. Management integration
should ensure further improvement of operational excellence and accountability
for the programme. Stronger financial integration should be based on overall
and yearly adequate financial contribution by the Eurostars-2 Participating
States and a high degree of national synchronisation. This should be achieved
through a progressive harmonisation of national funding rules.

(16)     The Union's financial
contribution should be managed in accordance with the principle of sound
financial management and with the rules on indirect management set out in
Regulation (EU, Euratom) No 966/2012 of 25 October 2012 of the European
Parliament and of the Council on the financial rules applicable to the general
budget of the Union[27]
and Commission Delegated Regulation (EU) No 1268/2012 of 29 October 2012 on the
rules of application of Regulation (EU, Euratom) No 966/2012[28].

(17)     In order to protect the
Union's financial interests, the Commission should have the right to reduce,
suspend or terminate the Union's financial contribution if Eurostars-2 is
implemented inadequately, partially or late, or if the participating states do
not contribute, or contribute partially or late, to the financing of
Eurostars-2. Those rights should be provided for in the delegation agreement to
be concluded between the Union and the ESE.

(18)     Participation in indirect
actions funded by Eurostars-2 is subject to Regulation (EU) No .../2013 of the
European Parliament and of the Council of ...2013 laying down the rules for the
participation and dissemination in 'Horizon 2020 – the Framework Programme for
Research and Innovation (2014-2020)[29].
However, due to specific operating needs of Eurostars-2 it is necessary to
provide for derogations from that Regulation in accordance with Article 1(3) of
that Regulation [Rules for the participation and dissemination in Horizon
2020].

(19)     In order to facilitate the
participation of SMEs which are more used to national channels and which would
otherwise carry out research activities only within their national boundaries,
the Eurostars-2 financial contribution should be provided in accordance with
the well-known rules of their national programmes and implemented through a
funding agreement directly administered by the national authorities, combining
Union funding with the corresponding national funding. Derogation should
therefore be made from Article 14(5), Articles 16(1), 19[(1), (5) to (7)], 22
to 28 of Regulation (EU) No ... [Rules for the participation and dissemination in
Horizon 2020].

(20)     Audits of recipients of
Union funds provided under Eurostars-2 should be carried out in accordance with
Regulation (EU) No .../2013 of the European Parliament and of the Council of ...
2013 [the Horizon 2020 Framework Programme].

(21)     The Union's financial
interests should be protected through proportionate measures throughout the
expenditure cycle, including the prevention, detection and investigation of
irregularities, the recovery of funds lost, wrongly paid or incorrectly used
and, where appropriate, administrative and financial penalties in accordance
with Regulation (EU, Euratom) No 966/2012.

(22)     The Commission should
conduct an interim evaluation assessing in particular the quality and
efficiency of Eurostars-2 and progress towards the objectives set, as well as a
final evaluation and prepare a report on those evaluations.

(23)     Upon request from the
Commission, ESE and the participating states should submit any information the
Commission needs to include in the reports on the evaluation of Eurostars-2.

(24)     Since the objectives of this
Decision, namely to support transnational research activities performed by
research-intensive SMEs and to contribute to the integration, alignment and
synchronisation of national research funding programmes cannot be sufficiently
achieved by the Member States alone due to lack of transnational dimension and
of complementarity and interoperability of national programmes and can
therefore, by reason of scale and impact of the action, be better achieved at
Union level, the Union may adopt measures, in accordance with the principle of
subsidiarity as set out in Article 5 of the Treaty on European Union. In
accordance with the principle of proportionality, as set out in that Article,
this Decision does not go beyond what is necessary in order to achieve those
objectives,

HAVE ADOPTED THIS DECISION:

Article 1

Subject matter

This Decision lays down rules on the participation of
the Union in the second Research and Development Programme jointly undertaken
by several Member States aimed at supporting research performing small and
medium-sized enterprises (SME) (hereinafter "Eurostars-2") and the
conditions for its participation.

Article 2

Definitions

For the purpose of this Decision the
following definitions apply:

(1)          "SME" mean micro-,
small- and medium-sized enterprises, as defined in Commission
Recommendation 2003/361/EC in the version of 6 May 2003;

(2)          "research performing
SME" is an SME which reinvests at least 10% of its turnover to research
and development activities or dedicates at least 10% full-time equivalents to
research and development activities.

Article 3

Objectives

Eurostars-2 shall pursue the following
objectives:

(1)          promote research activities that
comply with the following conditions:

(a)     the activities are carried out by
transnational collaboration of research-performing SMEs among themselves or
including other actors of the innovation chain (e.g. universities, research
organisations)

(b)     results of activities are expected to
be introduced into the market within two years of the completion of an activity

(2)          increase the accessibility,
efficiency and efficacy of public funding for SMEs in Europe by aligning,
harmonising and synchronising the national funding mechanisms of participating
states

(3)          promote the participation of SMEs
without previous experience in transnational research.

Article 4

Participation in Eurostars-2

1.           The Union shall
participate in Eurostars-2 jointly undertaken by Belgium, Bulgaria, the Czech
Republic, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy,
Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands,
Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland, Sweden and the
United Kingdom as well as Iceland, Israel, Norway, Switzerland and Turkey
(hereinafter “participating states”), in accordance with the conditions set out
in this Decision.

2.           Any other Member State and
any other country associated to the Horizon 2020 –The Framework Programme for
Research and Innovation (2014-2020) established by Regulation (EU) No .../2013 ...
(hereinafter “Horizon 2020 Framework Programme”) may participate in Eurostars-2
provided it fulfils the condition set out in Article 6(1)(c) of this Decision.
Those Member States and associated countries that fulfil that condition shall
be regarded as participating states for the purposes of this Decision.

Article 5

Union's
financial contribution

1.           The maximum Union's
financial contribution, including EFTA appropriations, to Eurostars-2 shall be
EUR 287 million[30].
The contribution shall be paid from the appropriations in the general budget of
the Union allocated to the relevant parts of the Specific Programme
implementing the Horizon 2020 Framework Programme, established by Decision ...
/2013/EU in accordance with Article 58(1)(c)(vi), and Articles 60 and 61 of
Regulation (EU, Euratom) No 966/2012.

2.           Without exceeding the
maximum amount set out in paragraph 1, the Union's contribution shall be equal
to one third of the contributions of the participating states referred to in
Article 7 (1)(a). It shall cover administrative and operational costs.

3.           A maximum of 2% of the
Union’s financial contribution may be used to contribute to the administrative
costs of Eurostars-2. Participating states shall cover any other administrative
costs necessary for the implementation of Eurostars-2.

Article 6

Conditions for the Union's financial contribution

1.           The Union's financial
contribution shall be conditional upon the following:

(a)     the demonstration by the participating
states that they have set up the Eurostars-2 in accordance with the objectives
laid down in Article 3;

(b)     the designation by the participating
states or organisations designated by the
participating states, of the Eureka Secretariat AISBL (hereafter “ESE”), as the
structure responsible for implementing Eurostars-2 and for receiving,
allocating and monitoring the Union's financial contribution;

(c)     the commitment by each participating
state to contribute to the financing of Eurostars-2;

(d)     the demonstration by ESE of its
capacity to implement Eurostars-2, including receiving, allocating and
monitoring the Union financial contribution, in the framework of indirect
management of the Union budget in accordance with Articles 58, 60 and 61 of
Regulation (EU, Euratom) No 966/2012;

(e)     the establishment of a governance
model for the Eurostars-2 in accordance with Annex II.

2.           During the implementation
of Eurostars-2, the Union’s contribution shall also be conditional upon:

(a)     the implementation by the ESE of
Eurostars-2 objectives set out in Article 3 and activities set out in Annex I
in accordance with the rules for the participation and dissemination referred
to in Article 8; (b)    the maintenance of an appropriate and efficient
governance model in accordance with Annex II;

(c)     the compliance by ESE with the reporting
requirements set out in Article 60 (5) of Regulation (EU, Euratom) No 966/2012;

(d)     the effective payment by the
participating states of the financial contribution to all participants to
Eurostars-2 projects selected for funding following the calls for proposals
launched under Eurostars-2, fulfilling the commitments referred to in point (c)
of paragraph 1;

(e)     allocation of the funding from the
national budgets for Eurostars-2 projects and the Union's financial
contribution in accordance with the ranking lists of the projects;

(f)      the demonstration of a clear progress
in the scientific, managerial and financial integration by the establishment of
minimum operational performance targets and milestones for the implementation
of Eurostars-2.

Article 7

Contribution from participating states

1.           Contribution from the
participating states shall consist of the following financial contributions:

(a)     the co-financing of the selected
Eurostars-2 projects, mainly through grants;

(b)     financial contribution to the administrative
costs of Eurostars-2 not covered by the Union contribution as set out in
Article 5 (3).

2.           Each participating state
shall designate a NFB to administer financial support to the national
participants in Eurostars-2 in accordance with Article 8.

Article 8

Rules
for participation and dissemination

1.           For the purpose of
Regulation (EU) No ... [Rules for the participation and dissemination in Horizon
2020] the ESE shall be considered a funding body.

2.           By way of derogation from
Article 14(5) of Regulation (EU) No ... [Rules for the participation and
dissemination in Horizon 2020], the ESE shall verify the financial capacity of
all applicants.

3.           By way of derogation from
Article 16(1) of Regulation (EU) No ... [Rules for the participation and dissemination
in Horizon 2020], the grant agreements with the beneficiaries of the indirect
action shall be signed by the NFBs concerned.

4.           By way of derogation from
Articles 19(1), (5) to (7) and 22 to 28 of Regulation (EU) No ... [Rules for the
participation and dissemination in Horizon 2020], the funding rules of the participating
national programmes shall apply to the grants administered by the NFBs.

Article 9

Implementation
of Eurostars-2

1.           Eurostars-2 shall be
implemented on the basis of annual work plans.

2.           Eurostars-2 shall provide
financial support mainly in the form of grants to participants following calls
for proposals.

Article 10

Agreements between the Union and ESE

1.           Subject
to a positive ex-ante assessment of ESE in accordance with Article 61(1) of
Regulation (EU, Euratom) No 966/2012, the Commission, on behalf of the Union,
shall conclude a delegation agreement and annual transfer of funds agreements
with the ESE.

2.           The delegation agreement
referred to in paragraph 1 shall be concluded in accordance to Articles 58(3),
60 and 61 of Regulation (EU, Euratom) No 966/2012 and in Article 40 of Delegated
Regulation (EU) No 1268/2012. It shall also set out the following:

(a)     the requirements for ESE regarding the
performance indicators set out in Annex II to Decision (EU) No ... [the Specific
Programme implementing the Horizon 2020 Framework Programme];

(b)     the requirements for ESE's
contribution to the monitoring referred to in Annex III to Decision (EU) No ...
[the Specific Programme implementing the Horizon 2020 Framework Programme];

(c)     the specific performance indicators
related to the functioning of ESE;

(d)     the requirements for ESE regarding the
provision of information on administrative costs and of detailed figures
concerning the implementation of Eurostars-2;

(e)     the arrangements regarding provision
of data necessary to ensure that the Commission is able to meet its
dissemination and reporting obligations;

(f)      the obligation for ESE to sign
Bilateral Agreements with the NFBs before any transfer of Union’s financial
contribution, laying down the minimum operational performance targets and
milestones for the implementation of Eurostars-2.

Article 11

Termination,
reduction or suspension of the Union’s financial contribution

1.           If Eurostars-2 is not implemented
or is implemented inadequately, partially or late, the Commission may
terminate, proportionally reduce, or suspend the Union financial contribution
in line with the actual implementation of Eurostars-2.

2.           If the participating
states do not contribute, contribute partially or late to the financing of
Eurostars-2, the Commission may terminate, proportionally reduce, or suspend
the Union financial contribution, taking into account the amount of funding
allocated by the participating states to implement Eurostars-2.

Article 12

Ex-post
audits

1.           ESE shall ensure that ex-post
audits of expenditure on indirect actions are carried out by the respective
NFBs in accordance with Article 23 of Regulation (EU) No ... [the Horizon 2020
Framework Programme].

2.           The Commission may decide
to carry out the audits referred to in paragraph 1 itself.

Article 13

Protection
of the financial interests of the Union

1.           The Commission shall take
appropriate measures ensuring that, when actions financed under this Decision
are implemented, the financial interests of the Union are protected by the
application of preventive measures against fraud, corruption and any other
illegal activities, by effective checks and, if irregularities are detected, by
the recovery of the amounts wrongly paid and, where appropriate, by effective,
proportionate and dissuasive administrative and financial penalties.

2.           ESE shall grant Commission
staff and other persons authorised by it, as well as the Court of Auditors,
access to its sites and premises and to all the information, including
information in electronic format, needed in order to conduct their audits.

3.           The European Anti-fraud
Office (OLAF) may carry out investigations, including on-the-spot checks and
inspections, in accordance with the provisions and procedures laid down in Council
Regulation (Euratom, EC) No 2185/96[31]
and Regulation (EC) No 1073/1999 of the European Parliament and of the Council[32] with a view to establishing
whether there has been fraud, corruption or any other illegal activity
affecting the financial interests of the Union in connection with an agreement
or decision or a contract funded under this Decision.

4.           Contracts, grant
agreements and grant decisions, resulting from the implementation of this
Decision shall contain provisions expressly empowering the Commission, the
Court of Auditors, OLAF and the ESE to conduct such audits and investigations,
according to their respective competences.

5.           In implementing
Eurostars-2, the participating states shall take the legislative, regulatory,
administrative or other measures necessary for protecting the Union’s financial
interests, in particular to ensure full recovery of any amounts due to the
Union in accordance with Regulation (EU, Euratom) No 966/2012 and Delegated
Regulation (EU) No 1268/2012.

Article 14

Communication
of information

1.           At the request of the
Commission, ESE shall send any information necessary for the preparation of the
reports referred to in Article 15.

2.           The participating states
shall submit to the Commission, through ESE, any information requested by the
European Parliament, the Council or the Court of Auditors concerning the
financial management of Eurostars-2.

3.           The Commission shall
include the information referred to in paragraph 2 in the reports referred to
in Article 15.

Article 15

Evaluation

1.           By 31 December 2017 the
Commission shall conduct an interim evaluation of Eurostars-2. The Commission
shall prepare a report on that evaluation which includes conclusions and
observations by the Commission. The Commission shall send that report to the
European Parliament and to the Council by 30 June 2018.

2.           At the end of the Union’s
participation in the Eurostars-2 but no later than 31 December 2022, the
Commission shall conduct a final evaluation of Eurostars-2. The Commission
shall prepare a report on that evaluation which includes results of that
evaluation. The Commission shall send that report to the European Parliament
and the Council.

Article 16

Entry
into force

This Decision shall enter into force on the
twentieth day following that of its publication in the Official Journal of
the European Union.

Article 17

Addressees

This Decision is addressed to the Member
States.

Done at Brussels,

For the European Parliament                       For
the Council

The President                                                 The
President

ANNEX I

IMPLEMENTATION

1.           ESE shall organise continuously open
calls for proposals with cut-off dates for the award of financial support to
indirect actions.

2.           Applicants shall submit project
proposals to ESE as single entry point.

3.           After the closure of a call for
proposals, a central eligibility check shall be carried out by ESE on the basis
of the eligibility criteria set out in the annual work plan. No different or
further eligibility criteria may be added by the Participating States.

4.           The ESE shall verify the
financial capacity of the participants according to common, clear and
transparent rules.

5.           Eligible proposals shall be
evaluated centrally and ranked by a group of external independent experts in
accordance with the criteria set out in Article 14(1) of Regulation (EU) No ...
[Rules for the participation and dissemination in Horizon 2020], on the basis
of transparent procedures.

6.           The ESE shall provide an
evaluation review procedure in accordance with Article 15 of Regulation (EU) No
... [the Rules for Participation and dissemination in Horizon 2020].

7.           The ranking list, approved as a
whole by the Eurostars-2 high level group (HLG) referred to in Annex II, shall
be binding for the allocation of funding from the national budgets for Eurostars-2
projects.

8.           Once the ranking list is
approved, each Participating State shall finance its national participants in
those projects selected for funding through the designated National Funding
Body, making all possible efforts to ensure that the top-50 ranked projects and
at least 50 to 75% of the projects above thresholds are funded. The financial
contribution to the participants shall be calculated according to the funding
rules of the Eurostars-2 Participating State’s national programme. The Union’s
financial contribution shall be transferred by ESE to the NFBs provided that
the NFBs have paid their financial contribution to the projects.

9.           All eligible participants in
project selected centrally shall be funded. The granting of financial support by
the NFBs to project participants selected centrally shall be subject to the
principles of equal treatment, transparency and co-funding.

10.         ESE shall be responsible for evaluating
proposals, informing NFBs, coordinating the synchronisation process, monitoring
projects through project reporting and audits carried out by NFBs, and
reporting to the Commission ensuring a short time to grant. It shall also take
appropriate measures to encourage recognition of the Union’s contribution to
the Eurostars-2 programme, both to the programme itself and to individual
projects. It shall promote appropriate visibility for such contribution through
the use of the Horizon 2020 logo in all published material, including printed
and electronic publications, related to Eurostars-2.

11.         ESE shall conclude Eurostars-2
Bilateral Agreements with the NFBs. The Eurostars-2 Bilateral Agreements shall
set out the responsibilities of the contracting parties in accordance with the
Eurostars-2 rules, objectives and implementation modalities. The Eurostars-2
Bilateral Agreements shall include the rules governing the transfer of the
Union’s contribution and the minimum operational targets and national
progressive milestones for further integration and synchronisation of national
programmes, including a shorter time-to-grant in accordance with the [Rules for
Participation and][the Financial Regulation]. These targets and milestones
shall be agreed by the Eurostars-2 HLG in consultation with the European
Commission. The signature of the Eurostars-2 Bilateral Agreement and the compliance
with the operational targets and milestones shall be a pre-condition for NFBs
to receive the Union’s contribution.

12.         Networking activities and exchange
of good practices shall also be organised amongst the participating states in
order to favour stronger integration at scientific, managerial and financial
level.

13.         Other activities shall also
include brokerage, programme promotion and networking activities with other
stakeholders (investors, research and innovation providers, intermediaries)
mainly to widen participation from beneficiaries in all Participating States
and to involve SMEs with no prior experience in transnational research
projects.

ANNEX II

GOVERNANCE OF EUROSTARS-2

1.           The ESE shall manage the Eurostars-2 Programme. The ESE is an
international non-profit association established under Belgian law (Aisbl) in
1997 by the EUREKA countries and by the European Union represented by the
Commission.

The Head of ESE as the legal representative of
ESE shall be in charge of implementing the Eurostars-2 programme by the
following:

(a)     the preparation of the annual budget
for the calls, central organisation of joint calls for proposals and reception
of the proposals as single entry point; the central organisation of the
eligibility and evaluation of proposals, according to common eligibility and
evaluation criteria, central organisation of the selection of proposals for
funding, and project monitoring and follow-up; the receipt, allocation and
monitoring of the Union contribution;

(b)     collecting the necessary information
from the NFBs for the transfer the Union contribution;

(c)     promotion of the Eurostars-2
Programme;

(d)     reporting to the Eurostars-2 HLG and
the Commission on Eurostars-2, including on progress towards further
integration;

(e)     informing the Eureka network about the
Eurostars-2 activities;

(f)      signing the delegation agreement with
the Commission, the bilateral agreements with the NFBs and the contracts with
the experts assessing the Eurostars-2 applications;

(g)     adopting the Eurostars-2 annual work
plan following the prior agreement of the Eurostars-2 HLG and of the
Commission.

2.           The Eurostars-2 HLG, composed of the national representatives in the
EUREKA High Level Group of the Eurostars-2 Participating States, shall
supervise operations of ESE on Eurostars-2 by the following:

(a)     supervising the implementation of the
Eurostars-2 Programme;

(b)     appointing the members of the
Eurostars-2 Advisory Group (hereinafter "EAG");

(c)     approving the annual work plan;

(d)     approving the ranking list of
Eurostars-2 projects to be funded and taking the award decision.

The Union, represented by the Commission, shall
have the status of observer in the Eurostars-2 HLG. The Commission shall be
invited to participate to the meetings, shall receive all meeting documents and
may take part in the discussion.

Any other EUREKA country not participating in
the Eurostars-2 Programme shall have the right to send representatives to
Eurostars-2 HLG meetings as observers.

3.           The
EAG shall be composed of EUREKA National Project Coordinators (persons in the
national government or agency dealing with the operational level of the
management of Eureka/Eurostars programme and in charge of the promotion of the
Eurostars-2 Programme in the participating countries) from the participating
countries. The Commission shall have the right to send representatives in the
EAG meetings as observers. The EAG meetings shall be chaired by the ESE.

The EAG shall advise the ESE as well as the
Eurostars-2 HLG on the arrangements for the implementation of Eurostars-2.

4.           The
NFB shall be in charge of the administration of financial support to the
national participants.

LEGISLATIVE
FINANCIAL STATEMENT

1.         FRAMEWORK OF THE
PROPOSAL/INITIATIVE

1.1.      Title of the proposal/initiative

1.2.      Policy
area(s) concerned in the ABM/ABB structure

1.3.      Nature
of the proposal/initiative

1.4.      Objectives

1.5.      Grounds
for the proposal/initiative

1.6.      Duration
and financial impact

1.7.      Management
mode(s) envisaged

2.         MANAGEMENT MEASURES

2.1.      Monitoring
and reporting rules

2.2.      Management
and control system

2.3.      Measures
to prevent fraud and irregularities

3.         ESTIMATED FINANCIAL
IMPACT OF THE PROPOSAL/INITIATIVE

3.1.      Heading(s)
of the multiannual financial framework and expenditure budget line(s) affected

3.2.      Estimated
impact on expenditure

3.2.1.   Summary
of estimated impact on expenditure

3.2.2.   Estimated
impact on operational appropriations

3.2.3.   Estimated
impact on appropriations of an administrative nature

3.2.4.   Compatibility
with the current multiannual financial framework

3.2.5.   Third-party
contributions

3.3.      Estimated impact on revenue

LEGISLATIVE FINANCIAL STATEMENT

1.           FRAMEWORK OF THE PROPOSAL/INITIATIVE

1.1.        Title of the
proposal/initiative

Participation
of the Union in a Research and Development Programme jointly undertaken by
several Member States aimed at supporting research performing small and
medium-sized enterprises.

1.2.        Policy area(s) concerned
in the ABM/ABB structure[33]

Research
and Technological development:

HORIZON
2020 (H2020) — Industrial Leadership — Innovation in SMEs

1.3.        Nature of the
proposal/initiative

 ̈ The proposal/initiative relates to a new action

 ̈ The proposal/initiative relates to a new action
following a pilot project/preparatory action[34]

ý The proposal/initiative relates to the extension of
an existing action

 ̈ The proposal/initiative relates to an action
redirected towards a new action

1.4.        Objectives

1.4.1.     The Commission’s
multiannual strategic objective(s) targeted by the proposal/initiative

The overall
objective of this legislative proposal, is to stimulate European economic
growth and job creation by enhancing the competitiveness of research-performing
small and medium size enterprises (SMEs), therefore contributing to the Europe
2020.

This will
be achieved by:

(1)
promoting market-oriented transnational research activities without thematic
restrictions by research-performing SMEs leading to new or improved product,
processes and services to the market;

(2)
contributing to the completion of the ERA and to increase accessibility,
efficiency and efficacy of public funding for research-performing SMEs in
Europe by aligning, harmonising and synchronising the national funding
mechanisms.

1.4.2.     Specific objective(s) and
ABM/ABB activity(ies) concerned

Specific
objective No 3.1 of Innovation in Small and Medium Enterprises

The
specific objective of the ‘Innovation in Small and medium Size Enterprises’
under the ‘Industrial leadership’ priority is to stimulate growth by means of
increasing the level of innovation in SMEs, covering their different innovation
needs over the whole innovation cycle for all types of innovations, thereby
creating more fast growing, international active SMEs.

The
Eurostars-2 Joint Programme will combine Union, national and private sources of
funding to support market-oriented research, executed in transnational projects
initiated and led by research-performing SMEs.

The
objective associated with this specific objective is the establishment and
operation of the Eurostars-2 with R&D projects led by research-performing
SMEs as the main output.

ABM/ABB
activity concerned: 08- Research and Innovation.

1.4.3.     Expected result(s) and
impact

Specify the
effects which the proposal/initiative should have on the beneficiaries/groups
targeted.

The firms
participating in Eurostars projects should be able to develop new products,
processes and services and significantly strengthen their competitive position
in the European and global marketplace.

The
expected impact (counted three years after the end a Eurostars projects on
average) is of M€10 increase in turnover for every 1M€ public fund, 25 jobs on
average created for every M€1 of public fund and 3 new or improved products,
processes or services on the market.

1.4.4.     Indicators of results and
impact

Specify the
indicators for monitoring implementation of the proposal/initiative.

The
indicators of results and impact set out in the Horizon 2020 — Framework
Programme for Research and Innovation specific objective ‘Innovation in SMEs’
are monitored and annually reported by the dedicated management structure to
the Commission.

The
indicators of results and impact set out in the Horizon 2020 – Framework
Programme for Research and Innovation specific objective “Innovation in SMEs”
are monitored and annually reported by the dedicated management structure to
the Commission.

The main
indicator is the “Share of participating SMEs introducing innovations new to
the company or the market, covering the period of the project plus 3 years”.
The target is 50%.

Other
indicators possibly further detailed and complemented with in the Delegation
Agreement between the Commission and the ESE, will refer to:

Investments
and co-funding of the Eurostars Joint Programme by the participating states;
Programme efficiency (in terms of time to evaluation results); Progress towards
the integration of national programmes (including time to grant); Management
integration (including a single reporting system and central evaluation in
place), Financial integration (with top 50 ranking Eurostars projects always
funded and standard financial viability check in place.

1.5.        Grounds for the
proposal/initiative

1.5.1.     Requirement(s) to be met in
the short or long term

Eurostars-2
is the follow up of Eurostars implemented along the lines of the interim
evaluation recommendations.

The Union’s
contribution is needed for the establishment and operation of the Eurostars-2
in order to allow co-financing of the activities with the participating states.
The Union’s contribution will in particular be used to co-finance participants
in selected Eurostars-2 projects following open calls for proposals.

1.5.2.     Added value of EU
involvement

The EU
intervention will contribute to the continuation of a legal framework where EU
and national funding are combined under a common strategy to stimulate
transnational collaborative R&D and innovation projects for the benefit of
research-performing SMEs. In particular, the participation of the EU will act
as an incentive for the Eurostars participating states to further harmonise and
align national programmes (rules and procedures), in line with the European
Research Area and will create incentives for increased national and industrial
investments in R&D and innovation in all the S&T fields, thus
contributing to the EU2020 objectives and to the final benefit of the
research-performing SMEs with high growth potential, which could become the
large European firms of tomorrow.

1.5.3.     Lessons learned from
similar experiences in the past

An interim
evaluation conducted in 2010 concluded that Eurostars is well aligned with the
objectives of Europe 2020, complements well the opportunities offered to SMEs
in FP7 for transnational cooperation and is attractive to the target group and
for those reasons was worth considering its continuation beyond 2013.

The
following recommendations for improvement were also made, i.a. the
participating states and the Union to provide sufficient funds to finance the
maximum of top ranking projects; to further streamline and harmonise the
implementation processes and funding rules at the national level; to improve
the quality of evaluations and to keep short time to contract as a priority.

These
lessons have been taken fully into account in the design of Eurostars-2.

1.5.4.     Compatibility and possible
synergy with other appropriate instruments

Horizon2020
foresee a number of instruments supporting SMEs besides Eurostars-2: the SME
instrument, the ‘Access to finance instruments’ and the possibility for SMEs to
participate via the more traditional collaborative projects.

Eurostars-2
is different and at the same time complementary to the above mentioned
initiatives.

While each
of those instruments responds to particular needs of a certain type of SMEs,
supporting them in different development stages of their research/business idea
(high technology readiness for the SME instruments, need of loans/equity rather
than grants for Financial Instruments), however none of them is specifically
dedicated to transnational research performing SMEs and contribute to the
integration and harmonisation of national programmes as Eurostars-2 does
through the use of Article 185 TFEU.

1.6.        Duration and financial
impact

ý Proposal/initiative of limited
duration

•        ý         Proposal/initiative
in effect from 01/01/2014 to 31/12/2020 for commitment appropriation and from
2014 up to 2024 for payment appropriations

•         ̈         Financial
impact from YYYY to YYYY

 ̈ Proposal/initiative of unlimited
duration

•        Implementation with a start-up period
from YYYY to YYYY,

•        followed by full-scale operation.

1.7.        Management mode(s)
envisaged[35]

 ̈ Centralised direct management by the Commission

ý Centralised indirect management with the delegation of implementation tasks to:

•         ̈         executive
agencies

•         ̈         bodies set up
by the Communities[36]

•        ý         national
public-sector bodies/bodies with public-service mission

•         ̈         persons
entrusted with the implementation of specific actions pursuant to Title V of
the Treaty on European Union and identified in the relevant basic act within
the meaning of Article 49 of the Financial Regulation

 ̈ Shared management with the Member States

 ̈ Decentralised management with third countries

 ̈ Joint management with international organisations (to be specified)

If more than one
management mode is indicated, please provide details in the ‘Comments’ section.

Comments

The
financial contribution of the EU to the joint programme will be paid to the
dedicated implementation structure, acting on behalf of participating states.
The dedicated implementation structure will manage Eurostars-2 and receive,
allocate and monitor the Union’s financial contribution. The structure
identified by the participating states is the EUREKA Secretariat. The
governance structure is described in greater detail in Annex III of the
Decision.

2.           MANAGEMENT MEASURES

2.1.        Monitoring and reporting
rules

Specify
frequency and conditions.

In
accordance with the Horizon 2020 — Framework Programme for Research and
Innovation, the implementation of the Eurostars-2 Programme is annually
monitored and reported by the dedicated management structure to the Commission.

An interim
evaluation will be conducted after three years of operation with the assistance
of independent experts. A final evaluation will be conducted by external
experts at the end of the programme. The Commission will submit the results to
EP and Council.

2.2.        Management and control
system

2.2.1.     Risk(s) identified

1) The key
risks concern the capacity of the dedicated implementation structure to manage
the Unions’ budget contribution and the effective monitoring of the national
agencies involved in the day to day operation of the programme

2) As with
other programmes with high SMEs participation, there is a risk of possible
financial losses due to the specific target group of Eurostars-2 (SMEs) and the
indirect centralised management approach.

3) A third
risk concerns the capacity of involved countries to effectively finance their
contributions to the programme.

2.2.2.     Control method(s) envisaged

Risk 1 is
mitigated by the fact that the EU, represented by the Commission, is full
member of the Eureka governance structure, supervising the dedicated
implementation structure for all Eureka matters.

For
mitigating risk 2, as mentioned in Article 13, in implementing the Eurostars-2
Programme, the participating states shall take the legislative, regulatory,
administrative or other measures necessary for protecting the Union’s financial
interests. In particular, the participating states shall take the necessary
measures to ensure full recovery of any amounts due to the Union.

Concerning
risks 1 and 2, see also chapter 2.3.

Concerning
risk 3, the Union’s contribution will be transferred to the beneficiaries via
the participating states’ funding agencies only when proof will be provided of
the effective payment of the national contribution to the beneficiary.

In
addition, the Union’s contribution cannot exceed one third of the contribution of
the participating states and Union’s support to administrative expenditures
cannot exceed 2 % of the overall Union’s contribution.

Additional
mitigation measures will be decided in the framework of the Delegation
Agreement between the EU and the ESE and of the Bilateral Agreements between
the ESE and the NFBs.

2.2.3.     Costs and benefits of
controls and probable non-compliance rate

The control
system set up for implementation of the programme will be designed so as to
provide reasonable assurance of achieving adequate management of the risks
relating to the effectiveness and efficiency of the operations as well as the
legality and regularity of the underlying transactions, taking due account the
special nature of Eurostars-2 as public-public partnership. The control system
must strike a balance between trust and control, taking into account
administrative and other costs of controls at all levels, especially for
participants, so that it can best contribute to achieving the objectives of the
Horizon 2020 Framework Programme.

2.3.        Measures to prevent fraud
and irregularities

Specify
existing or envisaged prevention and protection measures.

Article 6
of the Decision establishing EUROSTARS-2 states that the Union’s contribution
is conditional upon the compliance by ESE with the reporting requirements set
out in Article 60(5) of Regulation (EU, Euratom) No 966/2012. According to
Article 11, the Commission may terminate, reduce or suspend its contribution.

The
delegation agreement to be concluded between the Commission and ESE in
compliance with Article 61 of Regulation (EU, Euratom) No 966/2012 will provide
for the Commission to supervise the activities of ESE, in particular by
carrying out audits.

3.           ESTIMATED FINANCIAL IMPACT OF THE
PROPOSAL/INITIATIVE

3.1.        Heading(s) of the
multiannual financial framework and expenditure budget line(s) affected

–
Existing budget lines

In order of
multiannual financial framework headings and budget lines.

Heading of multiannual financial framework || Budget line || Type of expenditure || Contribution

08 02 02 03 Increasing innovation in small and medium-sized enterprises (SMEs) || Diff./non-diff. ([37]) || from EFTA countries[38] || from candidate countries[39] || from third countries || within the meaning of Article 18(1)(aa) of the Financial Regulation

1A || || Diff./non-diff. || YES || YES || YES || YES

3.2.        Estimated impact on
expenditure

3.2.1.     Summary of estimated impact
on expenditure

EUR million (to
three decimal places)

Heading of multiannual financial framework: || Number || Heading: 1a – Competitiveness for growth and jobs

DG: RTD || || || Year 2014 || Year 2015 || Year 2016 || Year 2017 || Year 2018 || Year 2019 || Year 2020 || Year 2021-2024 || TOTAL

Ÿ Operational appropriations || || || || || || || || ||

Number of budget line:08 02 02 03 || Commitments || (1) || 33,500 || 35,000 || 38,000 || 41,000 || 43,000 || 46,000 || 50,500 || || 287,000[40]

Payments || (2) || 4,000 || 28,000 || 30,000 || 32,000 || 34,000 || 36,000 || 40,000 || 83,000 || 287,000

Number of budget line || Commitments || (1a) || || || || || || || || ||

Payments || (2a) || || || || || || || || ||

Appropriations of an administrative nature financed from the envelope of specific programmes[41] || || || || || || || || ||

Number of budget line || || (3) || 0,337 || 0,344 || 0,351 || 0,358 || 0,365 || 0,372 || 0,380 || || 2,505

TOTAL appropriations for DG RTD || Commitments || =1+1a +3 || 33,837 || 35,344 || 38,351 || 41,358 || 43,365 || 46,372 || 50,880 || || 289,505

Payments || =2+2a +3 || 4,337 || 28,344 || 30,351 || 32,358 || 34,365 || 36,372 || 40,380 || 83,000 || 289,505

|| || || || || || || || || || ||

Ÿ TOTAL operational appropriations || Commitments || (4) || || || || || || || ||

Payments || (5) || || || || || || || ||

Ÿ TOTAL appropriations of an administrative nature financed from the envelope for specific programmes || (6) || || || || || || || ||

TOTAL appropriations under HEADING <....> of the multiannual financial framework || Commitments || =4+ 6 || || || || || || || ||

Payments || =5+ 6 || || || || || || || ||

If more than one heading is affected by the proposal /
initiative:

Ÿ TOTAL operational appropriations || Commitments || (4) || || || || || || || ||

Payments || (5) || || || || || || || ||

Ÿ TOTAL appropriations of an administrative nature financed from the envelope for specific programmes || (6) || || || || || || || ||

TOTAL appropriations under HEADINGS 1 to 4 of the multiannual financial framework (Reference amount) || Commitments || =4+ 6 || || || || || || || ||

Payments || =5+ 6 || || || || || || || ||

Heading of multiannual financial framework || 5 || ‘Administrative expenditure’

EUR million (to three decimal places)

|| || || Year 2014 || Year 2014 || Year 2016 || Year 2017 || Year 2018 || Year 2019 || Year 2020 || 2021 – 2024 || TOTAL

DG: RTD || ||

Ÿ Human resources || || || || || || || || ||

Ÿ Other administrative expenditure || || || || || || || || ||

TOTAL DG RTD || Appropriations || || || || || || || || ||

TOTAL appropriations for HEADING 5 of the multiannual financial framework || (Total commitments = Total payments) || || || || || || || || ||

EUR million (to three decimal places)

|| || || 2014 || 2015 || 2016 || 2017 || 2018 || 2019 || 2020 || 2021 – 2024 || TOTAL

TOTAL appropriations under HEADINGS 1 to 5 of the multiannual financial framework || Commitments || 33,837 || 35,344 || 38,351 || 41,358 || 43,365 || 46,372 || 50,880 || || 289,505

Payments || 4,337 || 28,344 || 30,351 || 32,358 || 34,365 || 36,372 || 40,380 || 83,000 || 289,505

3.2.2.     Estimated impact on
operational appropriations

–
 ̈      The proposal/initiative does not require the use of
operational appropriations

–
ý      The proposal/initiative requires the use of operational
appropriations, as explained below:

Commitment
appropriations in EUR million (to three decimal places)

Indicate objectives and outputs ò || || || Year 2014 || Year 2015 || Year 2016 || Year 2017 || Year 2018 || Year 2019 || Year 2020 || TOTAL

||

Type || Average cost || Number || Cost || Number || Cost || Number || Cost || Number || Cost || Number || Cost || Number || Cost || Number || Cost || Total Number || Total Cost***

SPECIFIC OBJECTIVE No 1 || || || || || || || || || || || || || || || ||

- Output (* **) || R&D projects || 0,56 || 180 || 100,700 || 205,000 || 114,800 || 240 || 134,600 || 275 || 154,400 || 325 || 181,600 || 375 || 209,800 || 450 || 252,100 || 2050 || 1.148,000

- Output || || || || || || || || || || || || || || || || || ||

- Output || || || || || || || || || || || || || || || || || ||

Subtotal for specific objective No 1 || || || || || || || || || || || || || || || ||

SPECIFIC OBJECTIVE No 2... || || || || || || || || || || || || || || || ||

- Output || || || || || || || || || || || || || || || || || ||

Subtotal for specific objective No 2 || || || || || || || || || || || || || || || ||

TOTAL COST || 180 || 100,700 || 205 || 114,800 || 240 || 134,600 || 275 || 154,400 || 325 || 181,600 || 375 || 209,800 || 450 || 252,100 || 2050 || 1.148,000

- A share of EU
contribution may be used to cover the administrative costs of the dedicated
implementation structure, with a ceiling of 2 % of the MEU contribution

** An average cost of EUR 1,4M€ is assumed for
Eurostars projects with an average public co-funding rate of 40%. With a public
funding of 0,56M€ per project, and an overall programme budget of 1148M€ (861M€
from Eurostars-2 participating states + 287M€ of EU contribution), about 2050
projects can be funded

*** The
EU contribution to the total costs shall not exceed EUR 287 million.

3.2.3.     Estimated impact on
appropriations of an administrative nature

3.2.3.1.  Summary

–
 ̈  The proposal/initiative does not require the use of appropriations
of an administrative nature

–
ý  The proposal/initiative requires the use of appropriations of an
administrative nature, as explained below:

EUR million (to
three decimal places)

|| Year 2014 || Year 2015 || Year 2016 || Year 2017 || Year 2018 || Year 2019 || Year 2020

HEADING 5 of the multiannual financial framework || || || || || || ||

Human resources || || || || || || ||

Other administrative expenditure || || || || || || ||

Subtotal HEADING 5 of the multiannual financial framework || || || || || || ||

Outside HEADING 5[42] of the multiannual financial framework || || || || || || ||

Human resources || 0,337 || 0,344 || 0,351 || 0,358 || 0,365 || 0,372 || 0,380

Other expenditure of an administrative nature || || || || || || ||

Subtotal outside HEADING 5 of the multiannual financial framework || || || || || || ||

TOTAL || 0,337 || 0,344 || 0,351 || 0,358 || 0,365 || 0,372 || 0,380

The administrative
appropriations required will be met by the appropriations of the DG which are
already assigned to management of the action and/or which have been redeployed
within the DG, together if necessary with any additional allocation which may
be granted to the managing DG under the annual allocation procedure and in the
light of budgetary constraints.

3.2.3.2.  Estimated requirements of
human resources

–
 ̈      The proposal/initiative does not require the use of human
resources.

–
ý      The proposal/initiative requires the use of human resources,
as explained below:

Estimate to be expressed in full time
equivalent units

|| 2014 || 2015 || 2016 || 2017 || 2018 || 2019 || 2020

|| || Ÿ Establishment plan posts (officials and temporary agents)

08 01 01 01 (Headquarters and Commission’s Representation Offices) || || || || || || ||

08 01 01 02 (Delegations) || || || || || || ||

08 01 05 01 (Indirect research) || 1.5 || 1.5 || 1.5 || 1.5 || 1.5 || 1.5 || 1.5

10 01 05 01 (Direct research) || || || || || || ||

|| || Ÿ External personnel (in Full Time Equivalent unit: FTE)[43]

08 01 02 01 (CA, INT, SNE from the ‘global envelope’) || || || || || || ||

08 01 02 02 (CA, INT, JED, LA and SNE in the delegations) || || || || || || ||

08 01 04 yy[44] || - at headquarters || || || || || || ||

- in delegations || || || || || || ||

08 01 05 02 (CA, SNE, INT — Indirect research) || 2 || 2 || 2 || 2 || 2 || 2 || 2

10 01 05 02 (CA, SNE, INT — Direct research) || || || || || || ||

Other budget lines (specify) || || || || || || ||

TOTAL || 3.5 || 3.5 || 3.5 || 3.5 || 3.5 || 3.5 || 3.5

is the policy area or
budget title concerned.

The human resources
required will be met by staff from the DG who are already assigned to
management of the action and/or have been redeployed within the DG, together if
necessary with any additional allocation which may be granted to the managing
DG under the annual allocation procedure and in the light of budgetary
constraints.

Description of
tasks to be carried out:

Officials and temporary staff || Participation in meetings of the governance body of Eurostars 2 taking place in the Eureka Secretariat premises (on average each body meets once every two months) Approval of the annual work plan Monitoring of implementation based on the yearly reports Coordination of the mid-term and final evaluations and preparation of the Commission reply to those evaluation in form of a Commission Report to be transmitted to Parliament and Council (1.5 official)

External staff || Support to preparation of delegation agreement with the DIS Preparation of annual financing decision and related payments Administrative support (2 CA)

3.2.4.     Compatibility with the
current multiannual financial framework

–
ý  Proposal/initiative is compatible the current multiannual
financial framework.

–
 ̈  Proposal/initiative will entail reprogramming of the relevant
heading in the multiannual financial framework.

Explain what reprogramming is required,
specifying the budget lines concerned and the corresponding amounts.

–
 ̈  Proposal/initiative requires application of the flexibility
instrument or revision of the multiannual financial framework[45].

Explain what is required, specifying the
headings and budget lines concerned and the corresponding amounts.

3.2.5.     Third-party contributions

–
The proposal/initiative does not provide for
co-financing by third parties.

–
The proposal/initiative provides for the
co-financing estimated below:

Appropriations in EUR million (to three decimal
places)

|| Year 2014 || Year 2015 || Year 2016 || Year 2017 || Year 2018 || Year 2019 || Year 2020 || Total In Mill euro

Specify the co-financing body : Member States[46] || 67,200 || 79,800 || 96,600 || 113,400 || 138,600 || 163,800 || 201,600 || 861,000

TOTAL appropriations co-financed || 67,200 || 79,800 || 96,600 || 113,400 || 138,600 || 163,800 || 201,600 || 861,000

Co-financing
details

The Union’s contribution to operating costs
(excluding the evaluation costs) of the Eurostars 2 Programme will be at
maximum 2% of the overall Union’s financial contribution.

The Union’s contribution shall be equal to
one third of the contributions of the participating states, but shall in any
case not exceed 287 M€.

Moreover, the organisations participating
in R&D projects selected through the Calls for Proposals launched by the
Programme will co-finance these projects. These co-fundings are expected to
amount to an average of 60% of the public funding received (but this differs
amongst the participating states).

3.3.        Estimated impact on
revenue

–
þ  Proposal/initiative has no financial impact on revenue.

–
 ̈  Proposal/initiative has the following financial impact:

 ̈         on own resources

 ̈         on miscellaneous revenue

[1]               An SME is a firm that has fewer than 250 employees, generates
annual turnover of less than € 50 million and is independent of larger
enterprises, according to Commission Recommendation 2003/361/EC of 6 May 2003.
See http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2003:124:0036:0041:en:PDF.

[2]               A research-performing SME is an SME which reinvests
at least 10 % of its turnover or devotes at least 10 % of its full-time
equivalents (FTEs) to research and development activities.

[3]               Gross Value Added (GVA) includes depreciation and rewards
to labour, capital and entrepreneurial risk. GVA is what remains when
intermediate costs are deducted from sales or turnover.

[4]               SME performance review 2012 Report, October 2012,
http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/performance-review/files/supporting-documents/2012/annual-report_en.pdf.

[5]               Eurostars initially included 26 EU Member States and five
countries associated with the Seventh Framework Programme. With Malta joining
Eurostars in October 2010, all EU Member States take part. The associated
countries are currently six: Croatia, Iceland, Israel, Norway, Switzerland and
Turkey.

[6]               Eureka is a European intergovernmental network,
established by a Conference of Ministers of 17 countries and Member States of
the European Communities in 1985, with the aim of supporting industrial
research collaboration. It currently has 40 member countries and supports also individual
projects, clusters and an umbrella programme besides Eurostars.

[7]               Decision No 743/2008/EC of the European Parliament
and of the Council of 9 July 2008 on the Community’s participation in a
research and development programme undertaken by several Member States aimed at
supporting research and development performing small and medium-sized
enterprises. OJ L 201, 30.7.2008, p. 58. See http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2008:201:0058:0067:EN:PDF.

[8]               Full report: http://ec.europa.eu/research/evaluations/pdf/archive/fp7-evidence-base/other_fp7_panel_evaluations/eurostars_programme_interim_evaluation.pdf.

[9]                      The Group of Independent Experts was chaired by Ms Laperrouze,
former Member of the European Parliament and Vice-President of Parliament’s Committee
on Industry, Research and Energy (ITRE).

[10]             Report from the Commission to the European Parliament
and the Council, Interim Evaluation of the Eurostars Joint Programme, Brussels,
8 April 2011, COM(2011) 186. See http://ec.europa.eu/research/evaluations/pdf/archive/other_reports_studies_and_documents/communication_eurostars.pdf.

[11]             See http://register.consilium.europa.eu/pdf/en/11/st11/st11030.en11.pdf.

[12]             COM(2011) 811 final.

[13]             The reports on the Workshops are published on the internet:
http://ec.europa.eu/research/horizon2020/pdf/workshops/innovation_in_small_and_medium_enterprises/summary_reports_workshops_on_21_june_and_12_july_2011.pdf#view=fit&pagemode=none.

[14]             Interviews with 37
Eurostars participants, 17 national R&D institutions in 10 countries and
more than 3 000 registrants on the Eurostars application site.

[15]             COM(2011) 808 final of 30.11.2011.

[16]             COM(2011) 809 final of 30.11.2011.

[17]             The amount is indicative and will depend on the final
amount for the DG RTD under the above mentioned challenge /theme.

[18]             OJ C, p. .[EESC opinion]

[19]             COM(2010)2020 final of 3 March 2010

[20]             OJ ... [H2020 FP]

[21]             OJ L 201, 30.7.2008, p. 58.

[22]             COM(2011) 186 of 8 April 2011.

[23]             OJ L 124, 20.5.2003, p. 36.

[24]             OJ ... [H2020 SP]

[25]             COM(2010) 546 final of 6 October 2010.

[26]             COM(2012) 392 final of 17 July 2012.

[27]             OJ L 298, 26.10.2012, p.1

[28]             OJ L362, 31.12.2012, p.1.

[29]             OJ ... [H2020 RfP]

[30]             The amount is indicative and will depend on the final
agreed amount for DG Research and Innovation for the objective “Innovation in
SMEs” under Part2-Industrial Leadership, which will be finally approved by the Budgetary
Authority in the final version of the legislative and financial statement.

[31]             OJ L 292, 15.11.1996, p. 2.

[32]             OJ L 136, 31.5.1999, p. 1.

[33]             ABM: Activity-Based Management — ABB: Activity-Based
Budgeting.

[34]             As referred to in Article 49(6)(a) or (b) of the Financial Regulation.

[35]             Details of management modes and references to the
Financial Regulation may be found on the BudgWeb site: http://www.cc.cec/budg/man/budgmanag/budgmanag_en.html.

[36]             As referred to in Article 185 of the Financial Regulation.

[37]             Diff. = Differentiated appropriations / Non-Diff. = Non-differentiated
appropriations.

[38]             EFTA: European Free Trade Association. .

[39]             Candidate countries and, where applicable, potential
candidate countries from the Western Balkans.

[40]             The amounts are subject to agreement on the financial
programming for budget line 08 02 02 03.

[41]             Technical and/or administrative assistance and
expenditure in support of the implementation of EU programmes and/or actions
(former ‘BA’ lines), indirect
research, direct research.

[42]             Technical and/or administrative assistance and
expenditure in support of the implementation of EU programmes and/or actions
(former ‘BA’ lines), indirect
research, direct research.

[43]             CA= Contract Agent; LA = Local
Agent; SNE = Seconded National Expert; INT = agency staff (‘Intérimaire’); JED= ‘Jeune Expert
en Délégation’ (Young Experts
in Delegations). .

[44]             Sub-ceiling
for external staff covered by
operational appropriations (former ‘BA’ lines).

[45]             See points 19 and 24 of the Interinstitutional
Agreement.

[46]             Belgium, Bulgaria, Czech Republic, Denmark, Germany,
Estonia, Ireland, Greece, Spain, France, Italy, Croatia, Cyprus, Latvia, Lithuania,
Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Rumania, Slovenia,
Finland and Sweden as well as Iceland, Israel, Norway, Switzerland and Turkey.